15 August 1971: Nixon ends gold convertibility

On this day in 1971, US President Richard Nixon said America would no longer officially swap dollars for gold, ending 'convertibility' and paving the way for high inflation.

Richard Nixon © Wally McNamee/CORBIS/Corbis via Getty Images
Richard Nixon set the scene for the high inflation of the 1970s.
(Image credit: © Wally McNamee/CORBIS/Corbis via Getty Images)

In 1944, under the Bretton Woods agreement, Western leaders created a global monetary system of fixed exchange rates. Currencies were fixed to the US dollar, which was convertible into gold at $35 an ounce.

By backing each dollar with gold, the US implicitly agreed to keep both the money supply and its trade deficit under control.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri